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As seen in
DECCAN HERALD
( Bangalore, India)
September 17, 2001
Death of world's financial nerve center?
by CHELSEA EMERY and RACHEL COHEN
The world's financial capital - Wall Street
- situated in New York may never regain its lost status following
the destruction of World Trade Centre on Tuesday.
THE DESTRUCTION of New York's World Trade Center may turn the
trickle of financial firms moving away from the Wall Street
financial district into a flood, rendering it the US financial
centre in name only.When two hijacked airplanes slammed into
the twin towers on September 11, the subsequent collapse of
the trade center and surrounding buildings killed perhaps thousands
and displaced at least 40,000 people. The disaster may have
put the nail in the coffin of an area that already had seen
an exodus of premier investment banks.
"Wall Street is becoming more of an electronic business," said
James Park, a trader for brokerage Brean Murray & Co. "It's
nice to go down to the exchange, there's a certain nostalgia.
But times change and this (event suggests) we need to re-evaluate
what happens in terms of security and where things are."
Many financial firms now are relocating to New Jersey and other
Locations to prepare for the resumption of trading, and experts
say some of these moves could become permanent. In addition,
firms may avoid the Wall Street area because of its high real
estate costs and out of fear for further attacks."Most companies
will start to re-assess where other support functions, back-office-type
functions really needs to be located," said Mark Smith, managing
partner of real estate advisory services at Ernst & Young.
"If they had space in New York, they may look at this now as
an opportunity to relocate some of that to a less expensive
area."
The collapse may have destroyed as much as 20 million feet of
office space in lower Manhattan. That's one-fifth the total
area available for offices in the area and the equivalent of
the total amount of business space available in Nashville, Tennessee,
or Minneapolis-St. Paul, according to Ernst & Young. Less
than four per cent of Manhattan's office space was vacant in
the fourth quarter of 2000, according to Reis.com, which provides
real estate data. That means there's far more demand than supply.
The World Trade Center was home to operations of more than 80
firms, including Morgan Stanley and Switzerland's Credit Suisse
Group Inc. Although both investment banks have their headquarters
uptown. One of the largest US bond traders, Cantor Fitzgerald,
was headquartered in building one. Companies forced to relocate
because of the blast say they don't know when they'll be able
to return to buildings in the area. New headquarters may become
permanent.
"Clearly some space that's gone will have to be replaced with
midtown," said Bruce Mosler, president of American operations
of real estate firm Cushman & Wakefield, referring to central
Manhattan. Cushman & Wakefield manages about 24 million
square feet in the area, said Mosler.Lehman Brothers had two
floors in the World Trade Center and is headquartered in the
adjacent World Financial Center, which was evacuated after the
attack. Lehman will now transfer some operations to its London,
Tokyo and New Jersey offices, said spokesman Bill Ahearn.
"We haven't been able to get back in there," Ahearn said, referring
to the World Financial Center. "They haven't even let our engineering
people do an official visit over there." Morgan Stanley, the
top US investment bank and the World Trade Center's largest
tenant with 3,700 employees, said operations previously located
at the World Trade Center will be moved to other sites in Manhattan
and facilities in New Jersey and Brooklyn.
The blast also slammed shut the doors of the 98-year-old New
York Stock Exchange, which is the cornerstone of Wall Street.
The building is just two blocks away from the mangled metal
and smoking metal that was once the Trade Center complex. The
exchange said on Thursday it would be closed through Monday,
making it the longest down time since World War I.
The hugeness of the Trade Center disaster
may succeed in damaging Wall Street as a prized business address
-- far more than the horse-drawn carriage bomb (packed with
500 pounds of broken-up windows-sash weights and explosives),
which exploded in September 1920, killing 30 and shattering
many windows. There is also the chance businesses will avoid
Wall Street because of security concerns. "I think its going
to change the whole face of lower Manhattan," said James Meiskin,
president of Plymouth Partners Ltd., a New York firm that represents
tenants looking for office space. "I just don't think its going
to be desirable. People are going to be afraid (to work down
there)." Tuesday's attack and fear of future attacks will probably
push some firms out of Manhattan, said David Kriss, owner of
commercial real estate firm David S Kriss Realty Co. Inc. "I
think there will be other attacks," Kriss said.
Manhattan real estate is expensive. Commercial space costs about
$55 a square foot downtown near Wall Street, while space in
Brooklyn goes for just $40, said Peter Brooks, principal at
Ernst & Young's real estate advisory services. Already,
an exodus of top firms from Wall Street had begun, as companies
looked to consolidate their operations in more spacious buildings
and cut costs. Bear Stearns Cos. Inc. was already entrenched
in midtown Manhattan and will move into a new 45-story building
on Madison Avenue, rather than the Wall Street area. Goldman
Sachs Group Inc., which is headquartered at 85 Broad Street
in lower Manhattan, recently scrapped a project near Wall Street.
To be sure, the area's pull as the symbolic and traditional
center of finance will remain.
"Wall Street will rebuild, prosper, and return," said Cushman
& Wakefield's Mosler. "These companies' resolve to be in
Manhattan is extraordinary."Still, some say they're not certain
the office space will ever be reclaimed."I certainly don't think
we're going to see another World Trade Center built on the site,"
said Meiskin of Plymouth Partners. "We're just going to see
a memorial."
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